United Security Bancshares - Third Quarter Profits: $1.7 million

FRESNO, Calif., Oct. 15, 2014 /PRNewswire/ -- United Security Bancshares (http://www.unitedsecuritybank.com/) (Nasdaq Global Select: UBFO) reported today unaudited consolidated net income of $4,659,000 or $0.31 per basic and diluted common share for the nine months ended September 30, 2014, as compared to $4,323,000 or $0.28 per basic and diluted shares for the nine months ended September 30, 2013.  United Security Bancshares reported consolidated net income of $1,703,000 or $0.11 per basic and diluted common share for the quarter ended September 30, 2014, as compared to $1,852,000 or $0.12 per basic and diluted common shares for the quarter ended September 30, 2013.

Annualized return on average equity (ROAE) for the nine months ended September 30, 2014 was 7.90%, compared to 8.10% for the nine months ended September 30, 2013.  Annualized return on average assets (ROAA) was 0.94% for the nine months ended September 30, 2014, compared to 0.90% for the nine months ended September 30, 2013.  On a year to date comparative basis, changes in income were the result of an increase of $1,095,000 in non-interest income, an increase of $1,216,000 in total interest income, and a $265,000 decrease in interest expense, partially offset by a $1,019,000 increase in the provision for credit losses and an increase of $974,000 in non-interest expense.

Annualized return on average equity (ROAE) for the quarter ended September 30, 2014 was 8.39%, compared to 10.14% for the same period in 2013.  Annualized return on average assets (ROAA) was 1% for the quarter ended September 30, 2014, compared to 1.14% for the same period in 2013.  Change in net income on a quarter-to-quarter comparative basis between the third quarters of 2014 and 2013 is primarily the result of a negative provision for loan loss of $1,150,000 during 2013, compared to a provision of $39,000, partially offset by a $687,000 increase in interest income during the third quarter of 2014.

The Board of Directors of United Security Bancshares declared a third quarter 2014 stock dividend of one percent (1%) on September 23, 2014. The stock dividend was payable to shareholders of record on October 10, 2014, and the shares will be issued on October 22, 2014.

Dennis R. Woods, President and Chief Executive Officer of the Company, states, "We continue to see positive momentum with strong loan and deposit growth, increasing net earnings, and reductions in non-performing assets. We have grown our loan portfolio by over $50 million year to date and look forward to continued success during the fourth quarter of 2014."  Shareholders' equity at September 30, 2014 was $81,295,000, up $4,752,000 from shareholders' equity of $76,543,000 at December 31, 2013. 

Net interest income before provision for credit losses for the nine months ended September 30, 2014 totaled $17,510,000, an increase of $1,481,000 from the $16,029,000 reported for the nine months ended September 30, 2013.  The net interest margin was 4.01% for the nine months ended September 30, 2014, as compared to 3.90% for the nine months ended September 30, 2013.  Net interest income before provision for credit losses for the quarter ended September 30, 2014 totaled $6,129,000, an increase of $702,000 from $5,427,000 reported for the quarter ended September 30, 2013. The net interest margin was 4.11% for the quarter ended September 30, 2014, as compared to 3.84% for the quarter ended September 30, 2013.  The Company experienced an improvement in net interest margin due to an increase in the balance of high-yielding loans as a percentage of total earning assets.

Noninterest income for the nine months ended September 30, 2014 totaled $4,133,000, reflecting an increase of $1,095,000 from $3,038,000 in noninterest income reported for the nine months ended September 30, 2013.  Customer service fees continue to provide the majority of the Company's noninterest income, totaling $2,639,000 and $2,554,000 for the nine months ended September 30, 2014 and 2013, respectively.  On a year over year comparative basis, non-interest income increased primarily due to a decrease of $485,000 on loss on fair value option of financial assets and a $691,000 gain on the sale of investment during the nine months ended September 30, 2014.  Noninterest income for the quarter ended September 30, 2014 totaled $1,311,000, reflecting a decrease of $102,000 from $1,413,000 in noninterest income reported for the quarter ended September 30, 2013.  Customer service fees totaled $957,000 for the quarter ended September 30, 2014, as compared to $873,000 for the quarter ended September 30, 2013. Changes in noninterest income on a quarter-to-quarter comparative basis between the third quarters of 2014 and 2013 are largely the result of a $46,000 reduction in gain on fair value option of financial assets during the quarter ended September 30, 2014.

For the nine months ended September 30, 2014, noninterest expense totaled $14,155,000, an increase of $974,000 as compared to $13,181,000 for the nine months ended September 30, 2013.  On a year over year comparative basis, noninterest expense increased primarily due to a $480,000 net cost on OREO during the nine months ended September 30, 2014, compared to a net gain on OREO of $1,036,000 for the same period ended September 30, 2013.  Partially offsetting the increase due to net cost on OREO were reductions in professional fees, correspondent bank service charges, and regulatory assessments.  Noninterest expense totaled $4,617,000 for the quarter ended September 30, 2014, a decrease of $337,000 as compared to $4,954,000 reported for the quarter ended September 30, 2013. Noninterest expenses fell during the third quarters of 2014 and 2013 primarily as a result of decreases in loss on tax credit partnership, net cost of OREO, and regulatory assessments of $148,000, $66,000, and $106,000, respectively.

The Company had a negative provision for loan loss of $101,000 for the nine months ended September 30, 2014, compared to a  negative provision of $1,120,000 for the nine months ended September 30, 2013.  Net loan recoveries totaled $228,000 for the nine months ended September 30, 2014, as compared to net charge-offs of $112,000 for the nine months ended September 30, 2013.  The Company had a provision for loan loss of $39,000 for the quarter ended September 30, 2014, compared to a negative provision of $1,150,000 for the quarter ended September 30, 2013.  Net loan recoveries totaled $27,000 for the quarter ended September 30, 2014, as compared to net loan recoveries of $545,000 for the quarter ended September 30, 2013.  With a modest recovery in the economy and real estate markets within the Bank's service area, the Company has maintained an adequate allowance for loan losses which totaled 2.48% of total loans at September 30, 2014, compared to 2.78% of total loans at December 31, 2013.  In determining the adequacy of the allowance for loan losses, Management's judgment is the primary determining factor for establishing the amount of the provision for loan losses and management considers the allowance for loan and lease losses at September 30, 2014 to be adequate.

Non-performing assets, comprised of nonaccrual loans, troubled debt restructures (TDR), other real estate owned through foreclosure (OREO), and loans more than 90 days past due and still accruing interest, decreased approximately $3,437,000 between December 31, 2013 and September 30, 2014.  Additionally, nonperforming assets as a percentage of total assets decreased from 5.04% at December 31, 2013 to 4.14% at September 30, 2014.  Nonaccrual loans decreased $2,586,000 between December 31, 2013 and September 30, 2014, while OREO increased $397,000 during the same period.  Impaired loans totaled $14,369,000 at September 30, 2014, a decrease of $3,763,000 from the balance of $18,132,000 at December 31, 2013.

United Security Bancshares is a $680+ million bank holding company headquartered in Fresno, California. United Security Bank, its principal subsidiary, is a California state chartered bank with 11 branches serving the Central Valley and Campbell, and is a member of the Federal Reserve Bank of San Francisco.

FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and the Company intends such statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) changes in interest rates, (2) significant changes in banking laws or regulations, (3) increased competition in the company's market, (4) other-than-expected credit losses, (5) earthquake or other natural disasters impacting the condition of real estate collateral, (6) the effect of acquisitions and integration of acquired businesses, (7) the impact of proposed and/or recently adopted changes in laws, and regulations on the Company and its business; (8) changing bank regulatory conditions, policies, whether arising as new legislation or regulatory initiatives or changes in our regulatory classifications, that could lead to restrictions on activities of banks generally or as to the Bank, including specifically the formal order between the Federal Reserve Bank of San Francisco and the Company and the Bank, (9) failure to comply with the written regulatory agreement under which the Company is subject and (10) unknown economic impacts caused by the State of California's budget issues, including the effect on Federal spending do to sequestration required by the Budget Control Act of 2011. Management cannot predict at this time the severity or duration of the effects of the recent business slowdown on the Company's specific business activities and profitability. Weaker or a further decline in capital and consumer spending, and related recessionary trends could adversely affect the Company's performance in a number of ways including decreased demand for our products and services and increased credit losses. Likewise, changes in interest rates, among other things, could slow the rate of growth or put pressure on current deposit levels and affect the ability of borrowers to repay loans. Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance including the factors that influence earnings. For a more complete discussion of these risks and uncertainties, see the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and particularly the section of Management's Discussion and Analysis.  Readers should carefully review all disclosures the Company files from time to time with the Securities and Exchange Commission ("SEC").

 

 

SOURCE United Security Bancshares

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http://www.unitedsecuritybank.com